2022 (6) TMI 731 - AT - Income Tax

Non grant the credit of TDS - credit denied as assessee had not offered the freight receipts as income for the relevant year under consideration - as argued assessee had shown the net of the Gross receipts of the Freight services against the disbursements to the Ex-servicemen truck owners in its audited books of accounts, and thus have fulfilled the requirements as specified in the provisions of Section 199 read with Rule 37BA of The Income Tax Act 1961 - HELD THAT - We find ourselves unable to confirm the orders passed. The factual matrix as noticed in the orders and as argued has remained unaddressed. It is necessary for us to highlight that under the Scheme of the Income Tax Act, what is to be brought to tax is the specific income arising from the stated activity in the specific period. It has been repeatedly canvassed and we notice that the argument has not been upset by the Tax Authorities. The assessee society incorporated under the HP Ex-Servicemen Corporation Act, 1970 was created to provide employment/financial benefits to the retired Defence personnel. The cement companies including A.C.C. Ltd., J.P. Cements etc. required the cement to be lifted and transported from the premises entered into an agreement with the assessee. Admittedly the assessee Society/Corporation did not own any trucks and agreements were entered into with ACC Ltd., Ambuja Cement etc. for transporting cement etc. from the premises. Since the assessee corporation did not own any trucks, these were hired by the Corporation and commission income from the said hiring activity was the income received by the Corporation only. However, since trucks have been engaged through the assessee by ACC Ltd. etc., the TDS deducted etc. payments by the ACC Ltd. were paid to the truck owners through the assessee, pleadings to this effect, we have noticed have been extracted in the respective orders, however, while passing the order, the AO, we find, has been guided by the fact that credit of TDS of freight receipts cannot be allowed as no freight receipts have been disclosed. Similarly, the ld. Commissioner is also influenced by this fact has confirmed the order. It is a fact that the freight receipts are not offered as income of the assessee as the income of the assessee was only commission income. The claim on facts needs to be examined by the Tax Authorities. Accordingly, on a perusal of the record and in the light of the submissions of the parties, we find that in the interest of justice, it is appropriate to set aside the respective orders and restore the issue back to the file of the CIT(A) for a proper consideration on facts - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Correctness of the order passed by CIT(A) under section 250 of the Income Tax Act, 1961 regarding the credit of IDS.
2. Disallowance of TDS credit on freight receipts by the Assessing Officer.

Issue 1: Correctness of CIT(A) Order on IDS Credit:
The appeal was filed by the assessee challenging the order passed by CIT(A) under section 250 of the Income Tax Act, 1961. The contention was regarding the credit of IDS of Rs. 1,90,76,546, duly reflected in Form no. 26AS. The CIT(A) did not grant the credit, stating that the assessee had not offered the freight receipts as income for the relevant year. The assessee argued that it had fulfilled the requirements specified in Section 199 read with Rule 37BA of the Income Tax Act, 1961. The Tribunal found that the CIT(A) and the Assessing Officer had not properly considered the facts and remanded the issue back to the CIT(A) for a correct appreciation of facts.

Issue 2: Disallowance of TDS Credit on Freight Receipts:
The Assessing Officer disallowed the TDS credit on freight receipts as the assessee did not disclose any freight receipts in the profit and loss account, despite claiming TDS on them in the income tax return. The CIT(A) upheld this disallowance, stating that since no freight receipts were disclosed in the return of income, the credit of TDS could not be allowed as per Section 199 of the Income Tax Act, 1961. However, the Tribunal noted that the assessee society's main income was commission income, not freight receipts. The Tribunal highlighted that the assessee did not own any trucks and entered agreements with cement companies for transportation services. The TDS deducted by the cement companies was passed on to the truck owners through the assessee. The Tribunal set aside the orders and remanded the issue back to the CIT(A) for a proper consideration of facts, emphasizing the need to examine the agreements entered into by the assessee with the cement companies.

In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes and remanded both issues back to the CIT(A) for a correct appreciation of facts. The judgment emphasized the need to consider the specific income arising from the activity and highlighted the role of the assessee as a facilitator in the transportation arrangements.